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Create a second income stream with these 2 FTSE 250 dividend stocks

Over the past half a decade, dividends at Ted Baker (LSE: TED) have almost doubled, a continuous run of annual double-digit-percentage earnings rises allowing the fashion firm to supercharge shareholder payouts.

So it comes as no surprise that City analysts are anticipating that payouts should keep rising at a rate of knots, given that further hefty profits increases appear to be on the cards.

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Profit rises of 10% and 11% are predicted for the years to January 2019 and 2020 respectively, and this means last year’s payout of 60.1p per share is expected to advance to 67.8p this year and again to 75.4p next year.

Investors can thus latch on to chubby yields of 3.1% and 3.5% for these prospective years. And I expect yields to remain the correct side of generous as demand for Ted Baker’s fashionable ranges continues to take off around the world.

Group revenues at the business rose 4.2% in the 19 weeks to June 9, its latest trading update revealed, with new stores and concessions that it opened across North America and Europe helping to drive turnover higher in the period. It now has 542 outlets spanning the globe. And the rate at which its e-commerce division is growing also gives cause for much optimism. Sales here jumped 33.6% in the period.

Right now Ted Baker carries a forward P/E ratio of 15.5 times, a readout which I believe makes the FTSE 250 clothing colossus a steal.

9% yields? You bet!

Those looking to create substantial income flows should also take a serious look at Paypoint (LSE: PAY) today.

Yields at the retail services and payment specialist have long ripped past those of the broader market and City analysts do not expect this to cease just yet. A predicted payment of 84.6p per share for the year ending March 2019 yields a mighty 9.1%. And next year, the dial moves to 9.2% on anticipation of an 86.1p dividend.

Right now PayPoint can be picked up on a forward P/E ratio of 15 times which I consider to be unbelievable value given the pace at which its revolutionary retail technologies, and more specifically its PayPoint One and EPoS Pro systems, are being picked up.

Sure, the FTSE 250 business may be expected to endure another fractional earnings decline this year. But profits are expected to get firing higher again from fiscal 2020 (with a 6% rise estimated for then), and latest trading details a few weeks ago reinforced my belief at least that PayPoint can deliver excellent profits growth over the longer term.

The company remains on track to have PayPoint One operational in 12,400 sites by next March, while adoption of EPoS Pro also remains impressive — it was operating in 292 stores by the close of June versus 154 just three months earlier. And with Paypoint’s Collect+ parcel collection service also making tracks, adding eBay to its partner list in the last quarter, things are looking good for strong and sustained, and thus dividend, growth in the years ahead.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of PayPoint. The Motley Fool UK has recommended eBay and Ted Baker. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.